On 1 January 1995, the Agreement Establishing the World Trade Organization (WTO) entered into force, and a new era of international trade relations began. In many respects, the ‘new’ trading institution is very much like the ‘old’ General Agreement on Tariffs and Trade (GATT) regime that has governed world trade since the late 1940s. The trading rules incorporate the results of the past eight rounds of GATT negotiations. The main difference is that the world’s leading trading nations have now committed to strengthening the institutional foundation of the trading system, providing greater legal coherence among its wide-ranging rights and obligations, and establishing a permanent forum for consultations and negotiations on an ever-broadening agenda of issues affecting global trade and investment in goods and services. This chapter summarises the main components of the WTO.
2 It then examines four challenges facing the trading system as it prepares to deal with the trade problems of the early twenty-first century.

THE WTO IN BRIEF

The Agreement Establishing the World Trade Organization establishes a legal framework that ties together the various trade pacts that have been negotiated under GATT auspices over the past four decades. The WTO Agreement encompasses the following trade pacts:

• the GATT 1994, including the agreement on Trade-Related Investment Measures (TRIMs) and the Tokyo Round codes (Annex 1A to the WTO Agreement);

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